Proctor and Gamble 2005 Annual Report Download - page 26

Management’s฀Discussion฀and฀AnalysisThe฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries
22 The฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries
At฀Procter฀&฀Gamble,฀we฀take฀great฀pride฀in฀our฀long฀history฀of฀doing฀
what’s฀right.฀If฀you฀analyze฀what’s฀made฀our฀Company฀successful฀over฀
the฀years,฀you฀may฀focus฀on฀our฀brands,฀our฀marketing฀strategies,฀our฀
organization฀design฀and฀our฀ability฀to฀innovate.฀But฀if฀you฀really฀want฀
to฀get฀at฀what฀drives฀our฀Company’s฀success,฀the฀place฀to฀look฀is฀our฀
people.฀Our฀people฀are฀deeply฀committed฀to฀our฀Purpose,฀Values฀and฀
Principles.฀It฀is฀this฀commitment฀to฀doing฀what’s฀right฀that฀unites฀us.
This฀commitment฀to฀doing฀what’s฀right฀is฀embodied฀in฀our฀financial฀฀
reporting.฀High฀quality฀financial฀reporting฀is฀our฀responsibility฀–฀one฀we฀
execute฀with฀integrity฀and฀within฀both฀the฀letter฀and฀spirit฀of฀the฀law.
High฀quality฀financial฀reporting฀is฀characterized฀by฀accuracy,฀objectivity฀
and฀transparency.฀Management฀is฀responsible฀for฀maintaining฀an฀effective฀
system฀of฀internal฀controls฀over฀financial฀reporting฀to฀deliver฀those฀
characteristics฀in฀all฀material฀respects.฀The฀Board฀of฀Directors,฀through฀
its฀Audit฀Committee,฀provides฀oversight.฀They฀have฀engaged฀Deloitte฀
&฀Touche฀LLP฀to฀audit฀our฀consolidated฀financial฀statements,฀on฀which฀
they฀have฀issued฀an฀unqualified฀opinion.
Our฀commitment฀to฀providing฀timely,฀accurate฀and฀understandable฀฀
information฀to฀investors฀encompasses:
Communicating฀expectations฀to฀employees.฀Every฀employee฀–฀from฀
senior฀management฀on฀down฀–฀is฀trained฀on฀the฀Company’s฀“Worldwide฀
Business฀Conduct฀Manual,”฀which฀sets฀forth฀the฀Company’s฀commitment฀
to฀conduct฀its฀business฀affairs฀with฀high฀ethical฀standards.฀Every฀employee฀
is฀held฀personally฀accountable฀for฀compliance฀and฀is฀provided฀several฀
means฀of฀reporting฀any฀concerns฀about฀violations฀of฀the฀Worldwide฀
Business฀Conduct฀Manual.฀The฀Worldwide฀Business฀Conduct฀Manual฀is฀
available฀on฀our฀website฀at฀www.pg.com.
Maintaining฀a฀strong฀internal฀control฀environment.฀Our฀system฀of฀฀
internal฀controls฀includes฀written฀policies฀and฀procedures,฀segregation฀
of฀duties฀and฀the฀careful฀selection฀and฀development฀of฀employees.฀The฀
system฀is฀designed฀to฀provide฀reasonable฀assurance฀that฀transactions฀
are฀executed฀as฀authorized฀and฀appropriately฀recorded,฀that฀assets฀
are฀safeguarded฀and฀that฀accounting฀records฀are฀sufficiently฀reliable฀฀
to฀permit฀the฀preparation฀of฀financial฀statements฀conforming฀in฀all฀
material฀respects฀with฀accounting฀principles฀generally฀accepted฀in฀
the฀United฀States฀of฀America.฀We฀monitor฀these฀internal฀controls฀
through฀control฀self฀assessments฀by฀business฀unit฀management.฀In฀฀
addition฀to฀performing฀financial฀and฀compliance฀audits฀around฀the฀world,฀
including฀unannounced฀audits,฀our฀Global฀Internal฀Audit฀organization฀
provides฀training฀and฀continuously฀improves฀internal฀control฀processes.฀
Appropriate฀actions฀are฀taken฀by฀management฀to฀correct฀any฀identified฀
control฀deficiencies.฀
฀
Executing฀financial฀stewardship.฀We฀maintain฀specific฀programs฀and฀฀
activities฀to฀ensure฀that฀employees฀understand฀their฀fiduciary฀responsibilities฀
to฀shareholders.฀This฀ongoing฀effort฀encompasses฀financial฀discipline฀in฀
strategic฀and฀daily฀business฀decisions฀and฀brings฀particular฀focus฀to฀
maintaining฀accurate฀financial฀reporting฀and฀effective฀controls฀through฀
process฀improvement,฀skill฀development฀and฀oversight.
Exerting฀rigorous฀oversight฀of฀the฀business.฀We฀continuously฀review฀
business฀results฀and฀strategic฀choices.฀Our฀Global฀Leadership฀Council฀
is฀actively฀involved฀–฀from฀understanding฀strategies฀to฀reviewing฀key฀
initiatives,฀financial฀performance฀and฀control฀assessments.฀The฀intent฀is฀
to฀ensure฀we฀remain฀objective,฀identify฀potential฀issues,฀continuously฀
challenge฀ each฀ other฀ and฀ ensure฀recognition฀ and฀ rewards฀are฀
appropriately฀aligned฀with฀results.
Engaging฀our฀Disclosure฀Committee.฀We฀maintain฀disclosure฀controls฀
and฀procedures฀designed฀to฀ensure฀that฀information฀required฀to฀be฀
disclosed฀is฀recorded,฀processed,฀summarized฀and฀reported฀timely฀
and฀accurately.฀Our฀Disclosure฀Committee฀is฀a฀group฀of฀senior-level฀
executives฀responsible฀for฀evaluating฀disclosure฀implications฀of฀
significant฀business฀activities฀and฀events.฀The฀Committee฀reports฀its฀
findings฀to฀the฀CEO฀and฀CFO,฀providing฀an฀effective฀process฀to฀evaluate฀
our฀external฀disclosure฀obligations.
Encouraging฀strong฀and฀effective฀corporate฀governance฀from฀our฀Board฀
of฀Directors.฀We฀have฀an฀active,฀capable฀and฀diligent฀Board฀that฀meets฀
the฀required฀standards฀for฀independence,฀and฀we฀welcome฀the฀Board’s฀
oversight.฀Our฀Audit฀Committee฀comprises฀independent฀directors฀with฀
significant฀financial฀knowledge฀and฀experience.฀We฀review฀significant฀
accounting฀policies,฀financial฀reporting฀and฀internal฀control฀matters฀
with฀them฀and฀encourage฀their฀independent฀discussions฀with฀external฀
auditors.฀Our฀corporate฀governance฀guidelines,฀as฀well฀as฀the฀charter฀
of฀the฀Audit฀Committee฀and฀certain฀other฀committees฀of฀our฀Board,฀are฀
available฀on฀our฀website฀at฀www.pg.com.
P&G฀has฀a฀strong฀history฀of฀doing฀what’s฀right.฀Our฀employees฀embrace฀
our฀Purpose,฀Values฀and฀Principles.฀We฀take฀responsibility฀for฀the฀quality฀
and฀accuracy฀of฀our฀financial฀reporting.฀We฀present฀this฀information฀
proudly,฀with฀the฀expectation฀that฀those฀who฀use฀it฀will฀understand฀our฀
Company,฀recognize฀our฀commitment฀to฀performance฀with฀integrity฀and฀
share฀our฀confidence฀in฀P&G’s฀future.
Management’s฀Responsibility฀for฀Financial฀Reporting
A.G.฀Lafley฀Clayton฀C.฀Daley,฀Jr.
Chairman฀of฀the฀Board,฀Chief฀Financial฀Officer
President฀and฀Chief฀Executive